Small-Cap Russell 2000 Index Enters A Correction

2026-04-02 14:54:26 ET

The Russell 2000 index that is focused on small-cap stocks has entered a correction, defined as a decline of 10% or more from recent highs.

The Russell 2000 has become the first major U.S. stock market index to fall into correction territory this year, though the S&P 500 and Nasdaq (NASDAQ: ) are not far behind.

The small-cap index is down nearly 11% from an all-time high of 2,735.10 reached earlier this year.

Small-cap stocks that have market capitalizations of less than $10 billion U.S. had outperformed to start the year as investors pivoted away from richly valued technology stocks.

But the Russell 2000 has declined as oil prices spike and fears of inflation and interest rate hikes rattle investor confidence.

The Russell 2000 has greater exposure to cyclical sectors and small-cap companies tend to be more reliant on loans to fund their operations, making them vulnerable to higher interest rates.

In March, the Russell 2000 index declined 7%, tipping it into a formal correction.

However, the Russell 2000 is likely to be joined by other stock indices as the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite each continue to decline.

Well-known small-cap stocks include the Gap (NYSE: ), Abercrombie & Fitch (NYSE: ), and Sweetgreen (NYSE: ).